Factsheet Commentary: August 2021

Hill & Smith announced their half year results, reporting a good recovery in trading across all three of its divisions. Compared with H1 2020, group revenue increased 12%, to £354m, and underlying operating profit increased 59%, to £42m. Even more encouraging, though, was that these numbers were 6% and 9% higher, respectively, than the pre-pandemic period of H1 2019. In spite of the raw material cost inflation noted in the period, the company remains confident of delivering full year underlying operating profit at the top end of analysts’ expectations. Markets like such beats and, over the last 6 months, the shares of this boring company are up 46%. We love boring

Hill & Smith was founded in 1824 and continues to change with the changing times. Every few years it seems to create its own luck. We now have President Biden’s $4.5 trillion infrastructure plan ahead of us and expect this company to be a beneficiary. 

Strix announced that their new Chinese factory is now fully operational. This superb management has doubled capacity, on schedule and on budget. Smaller companies are notorious for over-promising and under-delivering. Not this one. Though the management has guided the market to a doubling of revenue over the next five years, we believe the real performance will be materially better, which will lead to further re-rating by the market.

Sterling Investments Management Ltd
Lynwood House 2-4 Crofton Road,
Orpington, England, BR6 8QE

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